2013_AJC_H1_Econs_QnPaper

READ THESE INSTRUCTIONS FIRST Write your name, PDG and index number in the spaces provided on all the work you hand in. Write in dark blue or black ink on both sides of the paper. You may use a soft pencil for any diagrams, graphs or rough working. Do not use staples, paper clips, highlighters, glue or correction fluid. Section A Answer all questions. Begin your answer to each question on a fresh sheet of writing paper. Section B Answer one question. Begin your answer to Section B on a fresh sheet of writing paper. At the end of the examination, fasten your answers to each question separately. Fasten this cover page in front of your answers to Question 1. Indicate in the table below the question number of the question in Section B you have attempted. The number of marks is given in brackets [ ] at the end of each question or part question. Name _______________________________ ( ) PDG ______/12 This document consists of 8 printed pages and 1 blank page, including this cover page. [Turn over Section A Marks Awarded 1 / 30 2 / 30 Section B 3 / 4* * Delete accordingly / 25 Total Marks / 85 ANDERSON JUNIOR COLLEGE JC2 PRELIMINARY EXAMINATION 2013 Higher 1 8819/01 ECONOMICS Paper 1 16 September 2013 3 hours Additional Materials: Answer paper

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3 Section A Answer all questions in this section. Question 1 Fuel prices and the need for renewable energy Extract 1: Indonesia cuts fuel subsidies, risking social unrest President Susilo Bambang Yudhoyono is cutting fuel subsidies that threatened to swell to $30 billion in 2013 and pushed the budget deficit well beyond the legal limit of 3% of its Gross Domestic Product. In doing so, he risks sparking street protests and inflation. He has to weigh the threat of social unrest against the risk that international investors will desert the country. Meanwhile, the combination of a mounting budget deficit and a weakening currency - the rupiah has lost 5% of its value in the past 12 months, making it the second worst-performing currency in Asia - has sapped investor confidence. Adapted from Business Week, 27 June 2013 Table 1: Fuel information for Indonesia, 2009 to 2012 2009 2010 2011 2012 Oil Production (thousand barrels daily) 994 1003 952 918 Oil Consumption (thousand barrels daily) 1,316 1,426 1,549 1,565 Current account (US$ million) 10,628 5,144 1,685 -24,183 Current account (% of GDP) 2 0.7 0.2 -2.8 Sources: World Bank; BP.com Extract 2: Indonesia inflation hits 5.9% after fuel hike Indonesia's inflation accelerated in June after the government hiked the price of fuel for the first time since 2008. The increase had been expected after the price of fuel rose by up to 44% last month, pushing up the cost of transporting goods and people. The decision to reduce huge fuel subsidies, seen as a drag on Southeast Asia's largest economy,